Wednesday, July 3, 2013

The Problem Of Institutionalized Corruption In Iraq

Transparency International is a global organization
committed to fighting corruption. In April 2013 it released a report looking at the problem in Iraq, and its attempt to deal with it. Like many that have researched
the issue, Transparency International did not find a pretty picture. It found
that corruption wasn’t just at the bottom where bribes for example are
commonplace amongst the police and bureaucrats. The real theft came at the top
where all the political parties were involved in skimming money off of contracts,
the oil industry, and the budget. It’s for that reason that Baghdad shows no
real interest in dealing with the matter even though there are plenty of
offices, laws, and agreements to prevent it from happening. It’s this
institutionalization of corruption that will continuously plague the country,
and prevent it from reaching its huge potential.

(Iraq Business News)

Every group that looks at corruption in Iraq finds a bleak
situation. Corruption was widespread under Saddam Hussein, especially when
sanctions cut off much of the country’s money. Almost everyone believes that it
got worse after his overthrow in 2003. Transparency International in its annual
report on corruption has consistently ranked Iraq one of the worst in the
world. In 2012 for instance, it was 169 out of 175 countries with a score of 18
out of 100. The World Bank put Iraq at the bottom 10 percentile of nations
trying to control corruption in 2011. The 2010 Global Corruption Barometer found
that 77% of Iraqis surveyed believed that corruption had gotten worse in the
previous three years with only 4% saying it had decreased. A poll conducted the
next year by the World Bank found that 62% of companies said that corruption
was a major obstacle to doing business in Iraq. This has all cost the nation
tremendously. There’s no way to know exactly how much it has lost, because of
theft, fraud, and embezzlement, but there have been several estimates. Judge
Radhi Hamza Radhi, the former head of Iraq’s main anti-corruption agency the
Integrity Commission said that from 2003-2008 $18 billion was lost. A study
funded by the International Monetary Fund and World Bank estimated that $65
billion was smuggled out of the country from 2001-2010. In 2013, the Board of
Supreme Audit, which is in charge of checking Baghdad’s finances, believed that
$40 billion in illicit funds left the country each year. Those are staggering
figures for a country that is trying to pull itself out of wars and sanctions.
Losing that much money is simply robbing the future from the nation, and
severely handicapping its development.

Corruption is an everyday occurrence in Iraq. One of the
most common forms it takes is bribes. According to the Integrity Commission,
the police, customs, and the judiciary asked for bribes the most. A poll by
Transparency International conducted in 2011 found that 64% of Iraqis said they
paid a bribe to the police. That was the worst institution in the survey.
Paying money is also expected to get jobs in the police and army as well. This
also has an affect upon the economy. The World Bank’s enterprise survey
reported that bribes were asked for 33.8% of times in business transactions
with the government. This rate varied across the country with some of the province
at the high-end being Baghdad, 70%, Karbala, 89%, and Basra at the top at 100%.
It was also different based upon the size of the company. For instance, 64% of
medium sized firms said they were expected to pay up to get a government
contract. At the bottom end, the citizenry to get better services or speed up
the bureaucracy usually pays some money. The fact that this goes all the way up
to winning tenders with the authorities shows the extent to which corruption is
part of the governance of the country. Officials expect kickbacks in most
transactions whether it is to get papers filed or to build a power plant. It is
because this problem extends all the way to the top that it is such a dilemma
for state building.

One cause of this rampant corruption is nepotism and
clientelism. Every Iraqi government since 2005 has been a national unity one
meaning that every party that wins a seat in parliament gets its own ministry
and office. These officials then fill the government with their family members,
followers, and tribesmen. In 2012, the Bertelsmann Transformation Index
reported that this kind of clientelism led to massive hiring of unqualified
people into the public sector. For example, in 2011 the Integrity Commission
stated that there were around 20,000 government workers with fake degrees. The Justice Ministry thought the problem was even worse at 50,000 employees.
This extends to politicians themselves. In the 2009 provincial elections, 352 candidates had fake credentials and degrees, and 102 candidates in the 2010
parliamentary vote had them as well. Government offices continuously talk about
dismissing all these people, but it either never happens or the ones who
replace them are using fake papers as well. Without educated people and
technocrats Baghdad can’t hope to carry out the planning and execution of the
projects needed to reconstruct the country. What’s more important is
maintaining the patronage networks the parties use to stay in power.

This also points to the high-level corruption, which is at
the root of the problem in Iraq. In 2009 the Integrity Commission issued 152
arrest warrants for director generals or above, including eight ministers.
Former Integrity Commission head Judge Rahim al-Ogaili was forced to resign in
September 2011 after he discovered a network of shell companies stealing
government funds, which was run by high level officials including some in Prime
Minister Nouri al-Maliki’s office. Ogaili went on to say that the Baghdad had
no interest in fighting corruption, and just wanted to protect itself from
prosecution. In late 2012, the President of the Board of Supreme Audit told the
Special Inspector General for Iraq Reconstruction that high-level theft and
fraud had become institutionalized. It’s because all of the country’s political
parties and their ministries are involved in the systematic theft of government
funds that Iraq consistently ranks as one of the most corrupt in the world.
It’s one thing for a policeman to take a bribe to look the other way and ignore
a crime. It’s quite another for ministers to steal billions, and then have his
party block him from going to court for his offense. It’s because those at the
top are acting criminally that all those below them are following suit. It’s
also the reason why the nation has done nothing about the problem. If all the
parties are involved there’s no reason to go after offenders, because it would
implicate them all.

This theft affects every aspect of the government. The
budget for instance, is non-transparent. The Open Budget Survey gave Iraq a
score of 4 out of 100 in 2012, which means hardly any information is made
public. That means the people can’t hold officials accountable for what they do
with the funds, and they in turn can do what they like without any scrutiny.
Oil is Iraq’s most important industry, and brings in billions each month, which
offers a huge source of money to steal. Oil smuggling for instance, is still
going on from everything from local pipeline tapping to large-scale fraud. This
all goes to financing political parties, individual politicians, gangs, and
insurgents. Oil smuggling is estimated to have cost $7 billion from 2005-2008.
In 2013, a strike amongst oil workers in Basra complained that their management
was involved in stealing oil. The government has also failed to install meters
upon the entire industry, probably because it would interfere with their
nefarious activities. Finally, contracts with the security ministries have
repeatedly been found to include kickbacks and other illegal activities. In
2008, former Integrity Commission head Judge Radhi claimed that $4 billion was
lost in corruption in the Defense Ministry and $2 billion in the Interior. The
fake bomb detectors are a perfect example. Jim McCormick who made and sold the
devices was recently convicted of fraud in England, yet Prime Minister
Maliki claimed that Iraq had taken care of the issue a long time ago, and that
some of the detectors actually worked. To admit to wrongdoing would be to admit
that the entire deal was corrupt from the beginning, and included the premier’s
office. Instead, the fake devices are still being used throughout Iraq. At the
end of 2012, an Iraqi delegation went to Russia to finalize an arms deal for
the Defense Ministry, which involved huge kickbacks as high as $500 millionallegedly going to the Defense Minister Sadound Dulaimi, former government
spokesman Ali Dabbagh, the prime minister’s media adviser Ali Musawi, and
various generals and others officers in the Iraqi military. It’s this illegality
at the top that makes the situation in Iraq so bad. Iraqi officials seem to
think that it is their right to steal the country’s resources and money at
every turn. Governance is taking a backseat to greed, negatively affecting
daily life and the future.

If the government wanted to it has the tools and resources
to combat corruption. In 2007 it adopted the United Nations’ Convention Against
Corruption. It went on to develop an anti-corruption strategy with the help of
the international organization. It repealed Article 136b of the Criminal Code
that allowed ministers to stop investigations and protect their officials.
Baghdad has signed onto the Extractive Industries Transparency Initiative,
which covers the oil and natural gas fields. It has the judiciary, parliament’s
integrity committee, the Integrity Commission and Inspector Generals in each
ministry and office to look into corruption, the Board of Supreme Audit to go
through public finances, and the Anti-Corruption Committee to coordinate all this
work. The problem is there is no will to implement these laws and initiatives
or to support these various offices. Instead the heads of the Integrity
Commission have routinely been dismissed, and the prime minister attempted to
disband the Inspector Generals. The courts are supposed to be independent, but
have continuously come under pressure from the government and other forces,
which prevents it from convicting anyone but the lowliest officials of
corruption. That doesn’t stop Maliki from talking about taking up the fight
against this issue every year, but those are just empty words. His State of Law
list and all the others are up to their necks in robbing the government till,
and therefore has no reason to push the matter. Instead he has stood in the way
of investigations, and helped get rid of several Integrity Commission heads.

In its overview of corruption Transparency International
pointed out why it is such a pressing issue in Iraq, and why it will not be
solved. Everyone from the clerk at a government office to top ministers are
stealing billions of dollars each year. Most government contracts involve
bribes and kickbacks, while oil is being smuggled and funds stolen. The
agencies tasked with fighting this problem have been made ineffective by the
leadership who are partaking in this theft. The result is that Iraq is one of
the most corrupt countries in the world with no end in sight. As long as
everyone in the government feels that they can take a piece of the pie there is
no incentive to stop the practice, and it becomes institutionalized as part of
running the country.

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About Me

Musings On Iraq was started in 2008 to explain the political, economic, security and cultural situation in Iraq via original articles and interviews. If you wish to contact me personally my email is: motown67@aol.com